Screw Exit Strategy!

[Almantas]

Hi guys!

How often do you hear entrepreneurs asking "what's your exit strategy?"? I guess too often.

Would you be going into a relationship planning a break-up? I hope not.

We don't need an exit strategy. What we need instead is a commitment strategy. We need a proper strategy of how to weather storms, instead of jumping a ship and swimming back to the shore.

By concentrating on an exit strategy, we emphasise different things. We start building a business with a concentration on who is going to buy us out and for how much - when we hit a specific revenue target. Instead, we should be building a business with an emphasis on how we will scratch our target audience's itch...

Liquidating and taking your well-deserved break (entrepreneurs never fully retire) isn't bad and is a dream of many folks (including me), but diving into a business with an obsession to sell it out and retire with a pile of cash in Hawaii isn't the right mind-set to begin proper business with...

Provide value to customers who are willing to pay for your service/product and the suit-man will eventually knock your doors begging to take a truck-load of cash for your successful business.

Chasing an exit strategy (suit-man) is like chasing a woman - if you have nothing to offer she will ignore you and make fun of you. But if you concentrate on improving yourself (your business) and become the best version of yourself...women will crawl after you, begging to lick some of your success syrup (it usually doesn't apply to women who are actually trying to make something out of their lives - such women are confident, independent and require a different lure and hunting equipment).

 

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[TheDillon__]

I disagree.

Let's say I want to be the number one vegan cupcake producer in the U.S. I open up a shop, and I start making my cupcakes. I wake up early at 4am every day in order to get ready and be at the shop at 5 where I spend the next few hours baking until we open up shop at 8. Then, I stick around the store, helping out customers, running the books, taking trips back and forth to the grocery, checking on ad campaigns, fielding returns or complaints, scheduling employees, etc etc. until closing time (8pm) rolls around, and I spend the next hour cleaning up shop to get home by 9. Then, I effectively have an hour to spend time with my family, get things done, eat dinner, and get ready for bed - all to wake up again at 4am tomorrow, rinse, and repeat.

No one ever told me I could've started with a contracted bakery to make the first batch, gauge interest at a Farmer's Market, then continue to brand and grow via online sales. I never thought I'd need to do anyone that - I just wanted to get started selling cupcakes!

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It's absolutely vital and important to have an exit strategy when you're running your business - that way you know where your focus should be! If I plan to hand the business down to my children, then there's no reason I should be preparing to sell to a competitor - I should be focused on longevity! If I want to take the company public, maybe I should focus less on acquiring competitors, and focus more on finding beneficial ways to boost short term profits whilst looking to boost long term as well.

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To keep with your example, entering a business (chasing a woman) without an exit strategy is like saying "I know I want a girlfriend. I'm going to go get me a girlfriend and I have zero regard for any similar interests we might have, no care for any emotional differences that may exist between us, and the hell with physical appearances, I'm going to have a relationship!"

It's important to have an exit plan. That said, it's equally stupid to have an exit strategy and say something along the lines of "I will grow my business by a rate of 25.7% over the next 237 weeks, take the company public on May 18th, 2021 at 2:57pm at a share price of $30.4; then prepare for a 2023 buyout from Alphabet at a price of a modest yet profitable $41.19/share."

Having no plan is a mistake. Having specifics is a mistake. Know where you're headed so you can best mitigate the bumps in the road as they come, and have fun along the way.

 

[SteveO]

The businesses that I have been involved with have a much greater return on a sale than cashflow could ever garner. Multiple exit strategies should be planned with contingencies.

Every business is different so consider that there are thousands of types.

 

[Tim Allen Jr.]

I like the thinking of contingencies instead of exit strategy. Solid thought.

 

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[ZCP]

Disagree. Exit strategy helps form and plan the overall business. Without it at least considered and planned, you are more likely to create a job.

How do you know what type of entity to form, how to structure financing / insurance, and internal reporting and metrics without knowing where you are trying to get to down the road?

Couple it with what I believe to be the key to any business ..... Profit per _______ . This is one of the most important items to figure out for your business.

 

[Tim Allen Jr.]

Hi guys!

How often do you hear entrepreneurs asking "what's your exit strategy?"? I guess too often.

Would you be going into a relationship planning a break-up? I hope not.

We don't need an exit strategy. What we need instead is a commitment strategy. We need a proper strategy of how to weather storms, instead of jumping a ship and swimming back to the shore.

By concentrating on an exit strategy, we emphasise different things. We start building a business with a concentration on who is going to buy us out and for how much - when we hit a specific revenue target. Instead, we should be building a business with an emphasis on how we will scratch our target audience's itch...

Liquidating and taking your well-deserved break (entrepreneurs never fully retire) isn't bad and is a dream of many folks (including me), but diving into a business with an obsession to sell it out and retire with a pile of cash in Hawaii isn't the right mind-set to begin proper business with...

Provide value to customers who are willing to pay for your service/product and the suit-man will eventually knock your doors begging to take a truck-load of cash for your successful business.

Chasing an exit strategy (suit-man) is like chasing a woman - if you have nothing to offer she will ignore you and make fun of you. But if you concentrate on improving yourself (your business) and become the best version of yourself...women will crawl after you, begging to lick some of your success syrup (it usually doesn't apply to women who are actually trying to make something out of their lives - such women are confident, independent and require a different lure and hunting equipment).

I do get what you are saying though. Its like the vikings (i think) that burned their ships when they went to conquer a land so they had no choice but to win.

 

[Waspy]

Nahhhhh.

This entirely depends on why you are in business. The whole point of my fastlane is early retirement. The ability to enjoy the one life I have been given with as much freedom as the modern world will allow me.

Therefore, of course I have exit strategies. But that doesn't mean it's my ONLY strategy or focus. My exit strategy highlights the importance of loyal and happy customers to gain the best sale price. My exit strategy is my motivation to provide a fantastic business, and an awesome product to my customers.

Its the exit which DRIVES the present.

 

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[Iammelissamoore]

I understand all points being raised and I see both sides clearly, as most of these situations go, each individual may have different goals/outcomes as each entity differ from one to the other; however, while I do believe that we do not know what the future holds, I like that concept regarding planning according to contingencies.

Surely, as originally raised in the post, we don't start a business or a relationship with the intention of ending it; however, an exit srategy doesn't always necessarily mean wam-bam-the-end. An exit strategy is as simple as passing on the company to our children, as much as taking the company public or even selling it etc.

However, as far as exit strategies go, it's just as much as learning market trends alongside running one's company. We never really know what the desrired outcome may be until we arrive at that stage in the business, surely, it is healthy to have an idea of what outcome we desire, but the strategies may change as fast as the market does depending on many contributing factors at that point in time.

I think what often happens with us is this concept of planning planning planning, we're constantly under pressure to always have a fail-safe plan in place 'just-in-case.' However, there are many things we do not and cannot take into consideration when planning anything. E.g.

* A business plan cannot predict market changes.
* A life plan cannot predict ailments of us (and even if we eat healthy/exercise) it cannot predict the health of loved ones who may require our help/time or any other type of family situations.
* A relationship plan cannot predict unforeseen items.

Generally, while plans may be a great thing, as we try to cover in length that which we desire it to, it can only guarantee us, up to that specific time what 'may' be sure, but it can't guarantee us much after that.

We can mostly post assumptions to possibilities ahead and adjust in the most beneficial way we see fit.

 

[Iammelissamoore]

Nahhhhh.

This entirely depends on why you are in business. The whole point of my fastlane is early retirement. The ability to enjoy the one life I have been given with as much freedom as the modern world will allow me.

Therefore, of course I have exit strategies. But that doesn't mean it's my ONLY strategy or focus. My exit strategy highlights the importance of loyal and happy customers to gain the best sale price. My exit strategy is my motivation to provide a fantastic business, and an awesome product to my customers.

Its the exit which DRIVES the present.

Ahhhh yeah, I like this, this is a nice way to look at it.